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Problem solved?

Suppose Grant is right, and the Obama administration's revision to the HHS mandate, whereby religious employers are exempted from having to contribute their own dollars directly to pay for insurance policies that cover contraception, is sufficient to address concerns about religious freedom. It still might be that the policy is practically difficult to implement, as Sarah Kliff explains at the Washington Post:

The administration thinks this is a good deal for insurance companies since the economics tend to work in their favor. Numerous studies have shown that covering contraceptives is revenue-neutral, as such preventive measures can lower the rate of pregnancies down the line. Pregnancy and childbirth coverage is, of course, much more expensive.

Contraceptives save a lot of money, a senior administration official argued.

The catch here is that theres a difference between revenue neutral and free. By one reports measure, it costs about $21.40 to add birth control, IUDs and other contraceptives to an insurance plan. Those costs may be offset by a reduction in pregnancies. But unless drug manufacturers decide to start handing out free contraceptives, the money to buy them will have to come from somewhere.

Where will it come from, since neither employers nor employees will be paying for these contraceptives? That leaves the insurers, whose revenues come from the premiums that subscribers pay them. Its difficult to see how insurance companies would avoid using premiums to cover the costs of contraceptives. They could, perhaps, use premiums from non-religious employers. Those businesses wouldnt likely object on faith-based grounds, but they probably wouldnt be keen on footing the bill for people who arent on their payrolls.

This sounds like a genuine worry to me. Do we need to start preparing for a new round of private organizations asserting their rights not to be forced to do things they don't want to do, or does the fact that these organizations aren't religious ones mean that their consciences don't count?P.S. A different worry, now from Kate Pickert at Time:

One aspect of the new policy as yet unaddressed by the Administration is what would happen in the case of a large religious organization that is self-insured as many Fortune 500 companies are. For an institutions like this, insurance companies like Cigna or UnitedHealthcare are merely claims processing paperwork pushers, with the institution actually holding premium dollars and paying for health services. Would these organizations via their claims processor have to reach out to female employees and offer birth control pills?

I honestly have no idea how many, if any, religious organizations fit this characterization, but again it strikes me as a serious concern.Update: If the Becket Fund is to be believed, the number of religious organizations that self-insure is "hundreds if not thousands".

Comments

The self-insurance question is an interesting one, and I imagine the administration and stakeholders will be working that out over the next several months. But, as for the question of where the money will come from: insurance is a risk-sharing scheme whose pricing structure is dictated by actuarial tables. It's not like a term-life policy, whereby you pay into a pool that accrues equity over time. People who pay insurance premiums are always subsidizing services other people receive, and services many (in some cases, most) enrollees will never avail themselves of -- such as chemotherapy.

FWIW, America's Health Insurance Plans, the industry group, put out a statement this afternoon saying "contraceptive coverage" has long been accepted, and they are "concerned" about the "precedent" Mr. Obama may be setting. In other words, they gave the Obama announcement a big,fat HUH? So they aren't on board, Archbishop Dolan isn't on board. The fat lady hasn't sung.

I don't see the problem here except for an overzealous splitting of hairs. As noted by Grant above, insurance is about pooling risk. Yes, we pay for other people's contraceptives as well as our own. We also pay for other people's diabetes treatment caused by obesity even though we ourselves may not be obese. And lung cancer surgery for 3 pack a day smokers though we may abstain, treatment of alcohol and drug addictions, and on and on. We will see how this shakes out in the end. My hunch from the beginning of this " controversy" is that the bishops are eager for a fight with the administration and they may not want this resolved speedily. Archbishop Dolan seems to enjoy the spotlight.

Grant,Okay, but there is still the question whether insurance companies will want to offer for free something that they (evidently) now charge something for, right? And if they don't offer it for free, but instead increase premiums on the plans paid for by religious organizations, then the problem seems to remain.

The solution proposed by the administration is that we just lie to one another and move on. Wow - How lame can Democrats get and how stupid do they think the rest of us are? The federal government is not paying the premiums for the health insurance at your local Catholic hospital or school and it is simply not the business of the federal governmtn to dictate the particulars of employers' policies. If as a people, after due consideration and debate of course, if we decide that all women in America need access to free BC pills and the like, then the federal government should offer that; not force churches to. Geez! Here you have the Catholic Church, for many decades quietly, professionally running Catholic social services, providing healthcare to their employees (that alone is more than many businesses do) and important charity and social services to millions, and now the federal government via ACA comes romping in like some big German circus horse, trampling on religious freedoms and generally wanting to push everyone around from here on out ad infinitum, ad nauseum. Small wonder people are beginning (we are only just beginning) to be upset; nobody will or should tolerate this sort of heavy handed government.And this is not to even mention the sort of opportunities for (eventuality of) all sorts of corruption that ACA establishes, for sweet and dirty, deals between Big Pharma, Big Insurance and Big Government that will no doubt reek to high heaven.

John,Here's the short version of a comment I just left on my own thread: In the long term, providing contraceptive services will save insurers money. In the short term, they can eat the up-front cost as a concession to a government that is handing them millions more customers as a result of the health-care law.

In the long term, providing contraceptive services will save insurers money. In the short term, they can eat the up-front cost as a concession to a government that is handing them millions more customers as a result of the health-care law.Perhaps this is right, and the insurers will buy it. I am just observing that there is no guarantee that they will agree without a fight.

Grant, I think your term life insurance analogy is incorrect. Term life is a risk sharing scheme and has no equity. Perhaps you were thinking of Whole Life or Universal Life which have some investment characteristics. But death benefits are a risk-sharing.My life experiences have taught me that when something appears to-good-to-be-true it usually fails. 'Free' contraception coverage seems to fall in that category.

President Obama again is playing politics with an important Constitutional issue in hopes of diffusing the controversy, as he rightly saw it could be an obstacle to his re-election. At first I hoped that he would offer a real compromise. Instead, he offers obfuscation and, word manipulation, and once more we see his annoying habit of thinking the American public can so easily be fooled. All this "new policy" does is add another layer of paperwork and bureaucracy ;it changes nothing substantial, as the Catholic institutions mandated to offer health coverage will still be paying for contraceptives, sterilization and pharmaceutical abortions.

Anyone familiar with the insurance industy knows that this tactic is absurd.Most large employers self-fund their group health insurance plans. This means employers pay for their claims plus the insurance company's retention or administrative expense. If insurance companies are mandated to provide contraceptive coverage free of charge to employees of Catholic Institutions, they will pass on the cost to those employers.To argue that contraceptive coverage is cost-neutral because the cost will be offset by less pregancies, abortions and medical care is true, but this is not how group insurance works. Many covered services reduce healthcare cost but are not offered free of charge. Why single out contraceptive services. The cost of many prescription drugs are offset by lower healthcare cost. You don't see insurance companies offering free drugs benefits. If Catholic Institutions are offered contraceptive coverage for free by insurance companies because such coverage is so-called "cost-neutral", large employers will DEMAND the same. It will be interesting to see how such a "compromise" will work.

What I predict next is a backlash against the Bishops. The editorial below nicely summarizes what I predict will be the way that this is ultimately interpreted. The Bishops at first launched a blitzkrieg angry sermons from the pulpit. Two days after the HHS announcement, I went to mass at my local parish church and the Homily began as follows:This President has declared war on the Catholic Church. Its the same thing that Adolph Hitler did. I quietly got up, walked out, went to the Churchs website, and sent in a mild note of protest, on the comments/questions page. A couple of days later, I received a very nice reply from the pastor, saying that he agreed the wording (homily given by a senior priest, not the pastor) was inappropriate.Then I read news stories about how priests at every Catholic Church in Florida (etc.) were giving similar homilies (hopefully without the unfortunate comparison of Barack Obama to Hitler).The reality, when all the dust settles, was quite something else.http://www.orlandosentinel.com/news/opinion/views/os-ed-bill-press-02091... see how this plays out and how it is ultimately viewed. What I think is that it was the Bishops (and Mitt Romney, et al) who shot themselves in the foot, and not the Obama administration.- Larry Weisenthal/Huntington Beach CA

Jimmy Mac, thanks for the link to Jonathan Cohn's essay. I must say that it pleases me that he backs up the argument I made on two previous threads. The Church, even if it were an employer at those institutions, is not the source of the premiums. The employees, in accepting coverage, receive it as part of a compensation package. They pay for it with their labor! The Bishops could rest easy that they are not even remotely cooperating with "evil ". The MoJo article is a zinger. It's been the law all along! (Just not free.)

"Maybe we need an encylical defining, insurance, risk, subsidy, moving goal posts. (-: "Ed --We also need a metaphysical description of what happens to small amounts of money when they are pooled into a larger whole. For example, what happens to your insurance premiums when they are pooled with the other guy's insurance premiums? Does your premium retain some sort of identity? What is certain is that you don't really own it anymore -- you gave it to the company in exchange for a promise made by the company to pay you certain other quantities of money if you get sick and have some bills. So it doesn't really make sense to talk about "your money" or "my money" paying for the contraceptives of other people. The insurance company pays for them with the money that is now its own.I just don't see the problem of who is *really* paying for the contraceptives, etc. It's the insurance company deciding what to buy and then paying with their own money.

"Yes, we pay for other peoples contraceptives as well as our own. We also pay for other peoples diabetes treatment caused by obesity even though we ourselves may not be obese."Holloway --No, we don't pay for other people's stuff. We don't pay their bills -- the ins. co. does wth what is now its money. All we pay for is the insurance company's *promise*. (Or duty? The lawyers must have a word for it.) The money is no longer ours. What we do with it is not even a like a loan -- if it were a loan, we could call it back eventually. But we can't call premiums back because now the premiums are *theirs*. In fact, if we were never sick or had no preventive coverage, we would never get *any* money back from the ins. co., and that would be fair. When your insurance company pays your hospital bills, it pays with its own money, the money that *used to* belong to you and to the other premium payers, who *also* bought promises in return for possible future payment of bills.

Jimmy and Larry said I quietly got up, walked out And why quietly? Such disgusting nonsense should be called out as soon as it happens.Perhaps you will consider who is speaking Truth and who is speaking power. My vote is with the Bishops not the popular political opinion...

What a mess. This, evidently, is what happens when the government gets into the religion business. Welcome to the uneasy future.Who'd have thought that it would be something like this that would trip Obama up? Poor schmuck, he just didn't see it coming.

Here's the short version of a comment I just left on my own thread: In the long term, providing contraceptive services will save insurers money.Do you have any evidence for this discovery of yours? It's not a matter that can be settled just by convenient intuition.

"Okay, but there is still the question whether insurance companies will want to offer for free something that they (evidently) now charge something for, right?"John Schwenkler --What does "free" mean here"? We certainly not talking about gifts, are we? Aren't "free" services and products from companies really just a linguistic ploy to make people feel like they're getting a gift but there really isn't a gift involved? What makes a product/service "free"? A change in price, actually. The company *does* pay for the product, it just chooses to take a smaller profit (for what ever reasons it chooses) in order to make us want to buy the product/service.If I buy a new car, say, and the salesman throws in all sorts of little extras, he's not giving me anything free -- he's selling the car with add ons at a lower price than I expected to pay.

John Schwenkler 02/10/2012 - 4:45 pm contributorGrant,Okay, but there is still the question whether insurance companies will want to offer for free something that they (evidently) now charge something for, right?

Michael J. Barberi 02/10/2012 - 8:22 pm subscriberAnyone familiar with the insurance industy knows that this tactic is absurd.Most large employers self-fund their group health insurance plans. This means employers pay for their claims plus the insurance companys retention or administrative expense. If insurance companies are mandated to provide contraceptive coverage free of charge to employees of Catholic Institutions, they will pass on the cost to those employers.To argue that contraceptive coverage is cost-neutral because the cost will be offset by less pregancies, abortions and medical care is true, but this is not how group insurance works. Many covered services reduce healthcare cost but are not offered free of charge. Why single out contraceptive services. The cost of many prescription drugs are offset by lower healthcare cost. You dont see insurance companies offering free drugs benefits.If Catholic Institutions are offered contraceptive coverage for free by insurance companies because such coverage is so-called cost-neutral, large employers will DEMAND the same.It will be interesting to see how such a compromise will work.

I just watched Cardinal Wuerl on Morning Joe -- and what did I see?A man who is very chuffed and gratified at his political victory, and who eloquently speaks out of the coils of his self-persuaded and fanatical mind. Four young people who are appalled at the weird old gent but are being very nice to him. An inability to answer totally foreseeable questions, such as the 14% of employees who will need contraceptives for non-contraceptive purposes -- his answer: well, they are not as expensive as is sometimes said! A typical piece of clerical dishonesty. And then the repeated patronizing references to his witless analogy with the government telling broadcasters what to broadcast. He's as pleased as punch with that.Now what is really chilling for the future is this: he and the bishops are convinced that many, many Catholics are basically guilty about contraception and will rally to the Church knowing that the Church is right. The Cardinal points out that many Catholics go to jail for doing other evil things; and I think he would not be unhappy if using contraceptives was a jailable offense too (Paul VI scolded the Irish prime minister for allowing the sale of contraceptives to be legalized in Ireland). The bishops have found a marvelous method of moral blackmail -- its efficiency is seen even in the support they've found in Commonweal.But as one of the interviewers cannily remarks -- "I think we're going to see more movement on this story and I hope you'll be willing to come back."Yes, would the Cardinal be ready to face (the rage of) those who have not yet spoken: CATHOLIC WOMEN?

"No, we dont pay for other peoples stuff. We dont pay their bills the ins. co. does wth what is now its money. All we pay for is the insurance companys *promise*. (Or duty? The lawyers must have a word for it.) "I see your point Ann and you are right. My argument was not as precise as yours, but I believe the underlying reasoning is the same. Yes, it's the insurance co. money when it's handed over but it originates with the employee and goes into the pool. We are in it together with everyone's preventive health needs as well as health problems. To follow the bishop's reasoning would undermine the concept of insurance itself. As has been noted by many, how far can we go with conscience exemptions for the Catholic church and not expect other churches to opt out of coverage for their own peculiar obsessions - blood transfusions, mental health services, etc.

Grant -- your link does not constitute evidence at all. It's stupid to compare the yearly cost of contraception vs. the cost of a birth, for example. To even begin to think about this issue, you have to realize that even among women who are of childbearing age and who do not have contraception coverage, there are many different categories: 1. Those who want to become pregnant in a given year. Shockingly, such women are still known to exist. 2. Women who do not want to become pregnant, but who are already using contraception of any of the many varieties that are cheap and readily available everywhere you turn. 3. Women who do not want to become pregnant, and who are having sex regularly, and who not using any kind of contraception, but who don't care enough or prefer to take artificial contraception anyway, and so who wouldn't change their behavior if offered contraception coverage. 4. Women who do not want to become pregnant, and who are having sex regularly, and who are not using any kind of contraception, and who WOULD start taking artificial contraception if it were covered by insurance, but who would NOT have become pregnant in a given year anyway. 5. All of 4, but who WOULD have become pregnant in a given year without contraception coverage. Now the thing to realize is that you can't just compare the cost of contraceptive coverage with the cost of a birth. That's stupid. What you would have to compare is (A) the percentage of women who would fall in category 5 (this is the only category wherein any actual birth and the cost thereof is prevented by contraceptive coverage) vs. (B) the percentage of women who fall in category 2 (who are already using contraception but who would start taking advantage of insurance coverage for it). Let's assume that out of 1,000 women of childbearing age at a Catholic employer that doesn't offer contraceptive coverage, there are 900 who fall in category 2 (we're always being told that nearly every woman uses contraception). Suppose that it would cost $300 a year per person if they take advantage of contraceptive coverage. (Your article's claim of $40 a year is obviously calculated on a per-employee basis company-wide, not a per-user basis.)But what if there were only 5 woman who fell in category 5 -- women who weren't using contraception before, and who are now using contraception only because of the coverage, and who WOULD have gotten pregnant in a given year without the coverage? In that case, the company is spending $270,000 to provide the contraceptive coverage to those 1,000 women but saving $60,000 on prevented births. Well, these are just made-up figures, but the point is that the issue of actuarial cost savings is a lot more complicated than some people would blithely suggest. You'd have to take into account the predicted percentage of women who would actually start using the plan (and what the cost per user would be), and out of that group, what percentage of women would never have been using contraception otherwise and who WOULD have gotten pregnant otherwise. Again, if you think you've found a way that insurance companies could be saving themselves money, that they haven't thought of themselves, you ought to take a step back and wonder why someone who is completely ignorant of that industry and who has no monetary incentive at stake would so easily be able to out-think people who do have the benefit of knowledge and a strong incentive to offer a cheaper product.

Stuart: Clearly you missed your calling. Why don't you become an actuary? Sure, you won't be able to control troublesome arguments by narrowing them to a point over which you obsess and drive into the ground and use to tell other people that unless they agree with you they are stupid, but think of the insight you could bring to that self-deluded profession? Do it for the children, Stuart. The children.

Grant -- I thought you were going to start, at long last, to provide an example of using a more elevated and respectful tone around here. But that's hard, I suppose, when you're blowing smoke and get called on it.

I see no evidence that you are aware of any genuine actuarial information here. Point to some actuaries, and I'll be happy to read them. If there really are actuaries who have come to that conclusion legitimately, why bother with a mandate? Educate, don't mandate. That is, just educate the insurance industry about this cost-saving opportunity that they have somehow missed, and they'll all compete to offer cheaper plans that will save employers money, and employers will respond -- except for those who have moral objections, and you agree that they should be exempt anyway, right?

I see no evidence that you are aware of any genuine actuarial information here. Point to some actuaries, and Ill be happy to read them.Studebaker,You may find this interesting , from a commenter on Vox Nova:

The good news is both sides should get to feel vindicated.When a Catholic groups premiums come in higher than average, group A will be able to claim that they are sneaking contraception benefits into the cost. Group B will be able to claim that the added expenses of unplanned pregnancies are the cause of higher premiums. I call that a win-win, lol.Being one of the few here who has looked on the actuarial side, I can say that neither is reflective of insurance pricing. Pricing of group insurance is based on previous claims experience. The things that push the needle so to speak on that are claims experiences of participants over $25,000 in a year. Having a large group of contraception claims isnt going to push the needle. Whether it does so with pregnancies is already reflected in the claims experience. Where you see numbers for adding a contraception benefit have to do with the reinsurance market. Not all claims experience is contractually eligible for reinsurance. The is sometimes requested by the insurer and sometimes by the beneficiary. In the end, you arent going to get a satisfactory answer over whose dollar paid for what. It would be like going to Pepsi and asking them not to serve you Pepsi derived from Farmer Xs corn.

Studebaker,By the way, I don't think you are on the same page as the USCCB. Suppose the mandate were exactly the same, but it was certain there would be additional costs associated with employees who opted for contraception coverage. However, HHS made a deal that those costs would be paid for by a fund established by Bill Gates and Warren Buffett. It seems clear to me the USCCB would still object. Your argument, as I understand it, is that you don't believe costs won't go up. But if the Vox Nova commenter is correct, they won't. If somehow you become convinced that costs won't go up, I have no doubt whatsoever that you will not drop your opposition, but will instead just make a different argument against the mandate.

If somehow you become convinced that costs wont go up, I have no doubt whatsoever that you will not drop your opposition, but will instead just make a different argument against the mandate.It's as hard for me to believe that costs won't go up as it would be to believe that there are currently $100 bills lying on the sidewalk on every block in New York City and that a federal law is needed to require people to pick up the free money lying in front of them. But yes, if it really were true somehow that costs wouldn't go up by offering contraceptive coverage, I would argue that the mandate is pointless: just educate people on the point. If they still don't want to take advantage of it, they must have some serious moral or religious reason, and why be so antagonistic towards that? It's not as if contraceptive access is a serious problem in the first place. Administration shills are fond of telling us that 98% of women (even Catholic women) use contraception at some point, and if that's true, it's hardly as if usage could get any higher. 98% is about the number of Americans who have indoor plumbing.

Bruce. So this is "Truth?" - This President has declared war on the Catholic Church. Its the same thing that Adolph Hitler did.If this is your version of Catholic truth, all the more reason to leave it behind, as so many of us have done and/or are doing.

The major issue is whether the government can mandate insurance companies to offer contraceptive coverage "free" to Catholic Institutions. If insurance companies go along with this mandate, then all large employers who self-insure their health plans will demand that contraceptive coverage be free to them as well. It is NOT about the coverage mandate, but about the issue of "free" coverage. There has been no state or federal law to date that has mandated "free" coverage. This issue has significant consequences and implications about health insurance policy. If the justification for "free" coverage is that contraceptive services reduces the cost of total health care, then what about other services that do the same? If the issue is about religious liberty and conscience, then why should Catholic Institutions get "free" contraceptive coverage, while non-Catholic emplyoers have to pay for the same coveage? What will stop the government to mandate other medical services to be offered "free" of charge because they reduce total healthcare cost? This is an unsustainable policy and one that will get played out in the near future. There is never a "free lunch". Someone will be paying for it, and it will not be the insurance companies. It is a decieving shell game. I wonder ifl the insurance industry will fight this and how they plan of funding "free contraceptive coverage".

I don't understand why Grant Gallicho posts so many rude and arrogant messages. It is ironic that these come from the moderator on what is generally a fairly courteous site. I think he must be suffering from stress.